Chairperson, hon Minister and hon members, we stand before you today after yet another very successful local government election in which our communities have gone against international trends with respect to voter turn-out in local government elections. They came out in their numbers to vote for the parties and local representatives of their choice.
The message we heard while interacting with voters before and during elections, is clear. They said, "We expect better services now."
In the context of electricity, this means that citizens need to have access to electricity in their homes and when they turn on the switch the lights must come on all the time. We have now been given this responsibility for the next five years. We intend to do exactly that in partnership with the Minister and her department.
For us to achieve what is required by the citizens, it is necessary to ensure that there is enough energy to meet the distribution demand; the demand is managed so as to be within the supplied capacity; there is an extension of distribution infrastructure to reach all households; and there is refurbishment and maintenance of the distribution infrastructure so that when the users turn on the power, the lights must come on at all times.
The price of electricity must be such that consumers are able to afford to pay for services and distributors remain financially viable in the context of electricity income, as this is the only other revenue source, in addition to the rates income, from which municipalities may raise 90% of the revenue they require to perform the 38 functions assigned to them by the Constitution.
The SA Local Government Association, Salga, would like to focus on these five matters mentioned above in the discussion of the Budget Vote.
On the first issue, with regard to enough energy to meet the distribution demand, Eskom, with support from government, has gone a long way towards meeting the requirement of providing enough energy to meet the distribution demand. We have raised our concerns in respect of how this has been done; this is in as far as it has impacted on the affordability of electricity.
We think that as municipalities we can also contribute to ensuring that there is enough energy to meet the distribution demand. We stand ready to work with the Minister in respect of the resuscitation of some of the old mothballed municipal power stations.
We also believe that waste-to-energy is another critical opportunity that has multiple benefits for our country. It would not only contribute towards the supply of energy, but it can also result in solid waste having economic value. This can in turn unlock the potential interest of the private sector, small, medium and micro enterprises and community co-operatives in the collection and transportation of waste to the energy generation plants.
This will make our towns and rural areas cleaner, while relieving the municipalities of the ever-increasing costs of waste management. We would like to request the Minister to add this to her list of priority initiatives and work with local government to make this a reality.
On the issue of the demand management and supply capacity, for us as local government the focus on energy efficiency is not only a matter of climate change mitigation. We also see energy efficiency as an immediate measure in response to the capacity-constrained distribution infrastructure.
We have started to work with the national departments to facilitate publication of regulations that would support the development and enforcement of energy efficiency bylaws in buildings.
There is a need to supplement the energy efficiency awareness campaign with locally driven public awareness campaigns. This can be done through ward councillors and committees, using municipal and public buildings as demonstration points on how this can be done and the benefits thereof. We stand prepared to partner with the Minister in localising the energy efficiency awareness campaign.
Local government appreciates the support that is being provided by the Department of Energy to our 21 municipalities towards retrofitting municipal buildings to improve energy efficiency and retrofitting street and traffic lights to use renewable energy sources. We believe that these initiatives have now been tested and should be rolled out to all municipalities.
Indeed, if we do this, it will be possible for municipalities to reduce their own electricity consumption and for towns to take their own electricity consumption completely off the grid.
We believe that the 115 000 solar water heater systems delivered in two years, against a target of 1 million in 2010-11 alone, is cause for concern. While we accept that there may have been a funding constraint, the question that has to be asked is how the target of 1 million in 2010-11 was set if there were no resources to meet such a target.
Be that as it may, we believe that the approach of delegating this project to Eskom and Eskom's implementation mechanism, which sidelined the municipalities, may have been part of the problem.
We call upon the department to devise an implementation strategy for this programme that would take advantage of the benefit of numbers and the ability to assist the communities that would be leveraged by working with municipalities.
We also observe situations in which insurance companies do not replace burst geysers with solar water geysers. Surely it should be possible to use the rebate as a top-up to the insured value of the new geyser, to cover the price difference between a normal geyser and a solar water geyser.
We would like to propose that government discusses the immediate accommodation of such a scheme with the insurance companies. We also hope that Nersa's announcement of a rebate level below the standard offer, as indicated by the Minister, will also assist in this regard.
Around the extension of distribution infrastructure to all households, it has come to the attention of Salga that some municipalities are slow in spending their Integrated National Electrification Programme, Inep, allocations.
There are also cases where municipalities do not have qualified electricity managers and depend entirely on consultants to apply and ensure funding from Inep. In such cases there is no review of the appropriateness of proposed investments and quality of work.
Both of these are a reflection of technical capacity constraints that are the result of skills shortages in this sector. It must be noted that a country's skills development is a function of the national government and that each sector department, including the Department of Energy, should work with the Department of Higher Education and Training to ensure that the country has the required technical skills for this sector.
In the short term, we would like to propose that the regional Inep offices be provided with capacity to visit municipalities that do not have electrical engineers, to facilitate identification of appropriate projects, verify the appropriateness of proposed projects and the quality of work done and advise municipal managers accordingly before approving applications or paying invoices.
Around the issue of refurbishment and maintenance of distribution infrastructure, during the long period of uncertainty regarding the future ownership of distribution assets, there has been significant underdevelopment in the infrastructure. This has added to inherited maintenance backlogs that further accumulated as a result of the country's otherwise appropriate decision to prioritise the extension of infrastructure to those who lacked services, rather than focusing on maintaining infrastructure that serves the minority.
A study done in 2008 by Electricity Distribution Industry Holdings, EDIH, estimated that the backlog was R27 billion and was growing at R2,5 billion per annum.
Municipalities will not be able to raise R35 billion in the medium term on their own. But it would be irrational of us as a country to spend hundreds of billions of rand on electricity generation infrastructure, but remain with decaying distribution infrastructure to reticulate power to the end user.
Thirty-five billion rand, while a huge sum, is a fraction of what we are spending on energy generation capacity. Salga would like to propose to the Minister and her department that they partner with us as local government, Eskom and National Treasury in leading a process of developing a strategy to address this funding challenge as part of developing a way forward in respect of creating a sustainable electricity distribution industry.
On the matter of revenue and pricing, currently electricity income is the only other revenue source, in addition to rates income, from which municipalities must raise 90% of the revenue they require to perform the 38 functions assigned to them by the Constitution. [Time expired.]